AIAFeature

AIAFeature: Long-Term Benefits

Beyond the quick-fix of public-private partnerships.

As state and local governments increasingly turn to the private sector to finance public infrastructure projects, architects need to defend their future roles—for their own sakes as well as those of public owners and taxpayers. Public–private partnerships, known as PPP or P3s, introduce a fundamental change in project delivery because they shift the role of the architect from owner’s agent–advocate to developer’s subcontractor. With the potentially diminished role of the architect, say some industry analysts, public owners could get stuck with obsolete or poor-quality buildings, and taxpayers could be left footing the bill.

Since the recession began in 2008, government funding for public works has dwindled even though an investment of $3.6 trillion across all infrastructure types would be required to reach a state of good repair by 2020, according to the American Society of Civil Engineers. Lawmakers whose districts are struggling to get schools, hospitals, libraries, and other public facilities built thus see P3s as a win–win situation.

“This is being sold in the policy arenas as ‘free money,’ basically,” says Yvonne Castillo, AIA director of state and local government relations. “No one uses that phrase, but that’s the excitement that we hear from lawmakers when they’re talking about P3s. It’s an easy crutch that is plagued with long-term disastrous implications if it’s not used properly.”

Take the 2009 case of three schools in the U.K.—a pioneer in P3s, along with Canada and Australia—where teachers and students became ill from heat exhaustion and the National Union of Teachers said faulty ventilation and excess glass were partially to blame. A U.K. Audit Commission report on private finance initiative (PFI), or P3, schemes found that the quality of early PFI schools was worse than traditionally procured schools. “Most users were understandably pleased to have a new school, but they were less happy with some specific aspects of their buildings—for example, size, layout, and environmental control,” the report said.

There were cases when public officials turned up at ribbon-cutting ceremonies for a new school only to leave red-faced because of the poor quality of the structure. “The expression I heard was ‘an agricultural shed with windows in it,’ which means a barn,” says Brian Watkinson, an architect and principal of the Canadian professional service firm Strategies4Impact. Other reports detail cases in the U.K. in which PFI schools had to close because of falling student numbers, but education officials had to continue to pay the contractors millions of dollars for the schools for years to come.

“My cautionary tale is about underinvestment in design, adaptability, and sustainability. We must ensure that design has the space it needs,” says Sunand Prasad, Hon. AIA, a senior partner of London-based Penoyre & Prasad and the 2013 president of the Royal Institute of British Architects. “If not, then the public sector will get a bad deal in the long term.”

For those reasons, the AIA has been trying to ensure that architects have a place at the table while legislation is being drafted to cover P3s; its leaders advocate for provisions at the state level specifically (and more generally at the federal level) that protect and promote design quality, and provide reasonable guidelines and screening of P3s so that public risk is minimized and value for money is maximized.

The model legislation includes provisions that require public entities to make architects’ qualifications—not price—the first consideration. Provisions also include stipends for unsuccessful shortlisted proposers, which the AIA says will help smaller firms, including those headed by women and minorities. Development industry leaders, however, say some of the AIA’s efforts merely hold up business.

“Their members have important roles and interests, both as matters of public policy and their own livelihood, in the public procurement process,” says Rodney Moss, chairman of the law and legislative committee for the Association for the Improvement of American Infrastructure (AIAI). “When those interests serve the public good and integrity of the procurement, they should be preserved in P3 legislation. However, when those interests promote inefficiency and, therefore, increase cost and risk, and are self-serving, they should not be preserved.”

Development firms have been fiercely lobbying public officials to pass legislation quickly to get the ball rolling on construction projects. Five states—Florida, Maryland, North Carolina, Texas, and Virginia—as well as Puerto Rico—have passed legislation to bring procurement regulations on P3 construction up to date. Georgia, Indiana, Kentucky, and Oregon—as well as the District of Columbia—are actively negotiating bills.

In its most basic sense, the legislation being passed in states codifies P3 as a delivery method that transfers, in one contract, all responsibilities for the design, construction, and financing of publicly funded buildings to one private entity. The public entity, depending on the contractual terms of the agreement, no longer regulates the procurement process. Some projects are structured as long-term contracts in which the public entity pays the private entity to use the building after it’s constructed, with interest and a premium built in for the financier. The model bill that the AIA has drafted defines a performance-based delivery method using public–private partnership nomenclature. “We’re saying a public–private partnership delivery method requires that a public entity enter into a contract with a private entity to design, build, finance, maintain, and operate a public building,” says the AIA’s Castillo.

And Castillo goes on to explain that this is important because if a developer–financier is there only to design, build, and finance without a commitment to the long-term maintenance and operation of the facility, then its quality and long-term viability could be compromised.

“The simplest illustration is: You go to buy a television set and one of them has a 30-day warranty,” says Trey Wheeler, AIA, vice president of TWH Architects in Chattanooga, Tenn., and legislative chairman for AIA Tennessee. “The one that has a five-year warranty makes me think the manufacturer is standing behind what he is selling. So if we’re delivering quality buildings here, what’s the problem with standing behind them for some period of time?”

The AIA says it already has had some success with influencing legislation at the state level. A bill in Pennsylvania that attorneys say lacked adequate quality protections was significantly slowed down. A similar one in Tennessee has been put on hold. Wheeler urges architects in other states to get involved. Large development companies are already making themselves heard. Lobbying by U.K.-based Balfour Beatty, for whom Moss worked previously and is a current AIAI member, was instrumental in getting the legislation in Florida and Texas passed. It also lobbied to get the Tennessee legislation passed, but the AIA successfully managed to convince state officials to reconsider it.

“Well before the session starts, [large development firms] are already meeting with lawmakers, saying what they want and why they want it, and selling this bill as, ‘It’s the private sector, we can help you out. We’re ready to fund your buildings,’ ” said an attorney familiar with the legislation. “To a lawmaker trying to solve problems during their term, it looks awfully appealing.”